Govt tests private interest in handling Medicare/PBS claims

The Australian government has launched a process to gauge whether a private sector provider might be interested in, and suitable for, processing the $19 billion of medical benefits claims and $10 billion of pharmaceutical claims that the Department of Health handles annually.

In a national press ad marked ‘Market Testing’, the department has invited expressions of interest for companies able to provide “dynamic and innovative commercial solutions capable of providing these claims and payment services with a high degree of efficiency and integrity and which are adaptive and responsive to ongoing changes to the underpinning politics aimed at improving Australia’s health system.”

The decision follows a recommendation of the recent Commission of Audit, set up by the Abbott government to examine where budgetary savings might best be made. To date, the market testing component, to which some $500,000 was allocated in this year’s Budget, has been “largely unnoticed”, according to The Australian Financial Review (8 Aug 2014).

The ad explains that the demand for benefits claims, which currently stands at 600 million individual transactions, has experienced “steady growth” over the past three years, adding that, “Likely respondents will have considerable commercial experience in calculating entitlements, processing payments, reporting on activities and disbursements and delivery of client services focused on meeting customer expectations.”

Unlike Medicare and the PBS, the DVA expenditure is said to have been “relatively stable” in recent times, with 33 million transactions p.a. resulting in $2B being spent on medical, allied health and hospital claims, with an additional $425M for pharmaceutical benefits.

Prospective service providers have until 22 August to submit their responses.

Health Minister Peter Dutton said that the government was “determined to put into place a 21st century payment system that will be more efficient for patients and doctors,” adding: “It will reduce red tape for doctors and streamline their administrative processes, and, we believe, deliver, a saving to the taxpayer.”

The role of the taxpayer in funding government expenditure seemed less important when Mr Dutton was interviewed for a major profile in Fairfax’s Good Weekend magazine (9 Aug 2014).

“I just don’t see how,” he said, “in any government program, you can continue to give away things for free.”

This view of a program such as Medicare gives clear insight into why the proposed budgetary changes have been so strongly opposed by organisations such as the AMA, as well as by the broader community.